The History of Pay Per Click (PPC) Marketing

Below I take a look at where Pay Per Click (PPC) Marketing has come from and how it has evolved since it began in 1996. Included in the history is some little known facts such as the first big company to start using PPC advertising (it wasn’t Google) and the HUGE mistake that same company made early on.

The History Of PPC Advertising: 1996 – 2014

1996

  • The first documented and known PPC advertising spaces launched by Planet Oasis on a Desktop application.
  • Open Text Index begins selling PPC ads in their search results as ‘Preferred Listings’. Outcry and bad publicity ensues.
  • Google is started as a research project at Stanford University whilst Yahoo! launches its IPO valuing it at $334 million.

1997

  • More than 400 major brands actively using PPC advertising in search results and directories with prices fixed for every advertiser and ranging from $0.005 – $0.25 per click.
  • Yahoo! turns down an offer to buy Google for $1 million (HUGE mistake!).

1998

  • In February 1998 Goto.com establishes the PPC auction system with advertisers bidding for ad position on keywords and ads ranked by bid value. By mid 1998 advertisers were paying up to a dollar per click.

1999

  • GoTo.com launches a tool set that allows advertisers access to set real time pay per click bid amounts on individual keywords.

2000

  • The online advertising market crashes with the dot com bubble bursting causing many businesses to go bankrupt, scaring away advertisers.
  • Google launches Google Adwords, a selfservice advertising platform that allows advertisers to place ads on selected keywords. Adwords is launched with a flat CPM bidding model where advertisers pay each time their ad is shown.

2001

  • GoTo.com renames itself Overture Services and partners with Yahoo!, MSN and other search engines syndicating advertisers throughout the sites.
  • Overture earns $288 million in pay per click ad revenue with Google’s ad revenue from pay per impression ads hitting $85 million.

2002

  • Google Adwords introduces a new pay per click payment option for advertising on its search results. The new system also uses ad relevance (measured by click through rate) for ranking – maximising revenue and the search experience.
  • Shopping.com allows ecommerce sites to bid per click to have their products appear higher in the price comparison. Other shopping comparison networks follow suit.

2003

  • Yahoo! acquires Overture for $1.63 billion when its contract for ad syndication comes up for renewal.
  • Google launches Adsense (and acquires Applied Semantics) which allows online content publishers to serve pay per click advertising targeted to the site content and audience with publishers receiving a share of each click generated.

2004

  • Google’s search market share hits a peak of 84.7% of all searches on the internet and IPOs with a market value of $23.1 billion and annualised revenues of $2.7 billion (predominantly from PPC advertising.)

2005

  • Google acknowledges issues with click fraud in its pay per click network and implements measures to detect and stop the fraud occurring.
  • Google releases Google Analytics, allowing advertisers to better track the performance of their advertising campaigns.
  • Adsense generates $799 million in revenue in the 4th quarter, 42% of Google’s revenue.

2006

  • Microsoft drops Overture as its search ad provider and establishes its own self service pay per click advertising platform – adCenter.
  • Facebook launched advertising on its website partnering with Microsoft adCenter to syndicate banners and sponsored links.
  • Google acquires YouTube, the worlds largest online video site for $1.65 billion.

2007

  • Facebook launches its own advertising platform allowing advertisers to target users by demographics and interests.
  • Fetchback and Criteo launch remarketing. This allows advertisers to specifically target people who have been to their website in the past through a range of networks.
  • Bid management software solutions such as Marin are launched to automate PPC bidding.

2008

  • Google improves the relevance score it gives adverts (known as Quality Score) to improve the search experience and maximise the revenue it makes per search.
  • LinkedIn launches DirectAds allowing advertisers to target users of their website by demographics, industry or job title.
  • A range of new PPC networks start up including new options such as Shopping Comparison networks.

2009

  • With internet usage on mobile devices increasing, the major PPC networks start to focus their efforts on mobile advertising solutions with Google
    acquiring AdMob, a mobile advertising startup, for $750 million.

2010

  • Microsoft search relaunches as Bing and teams up with Yahoo! to syndicate their ads on the Yahoo network in a combined effort to combat Google’s growing search share.
  • Google Adwords unveils a host of new advertising options including Product Listing Ads and Remarketing.
  • Content marketing via pay per click platforms such as Outbrain grows in popularity for news outlets and publishers.

2011

  • Facebook launches sponsored stories which pulls users’ images and names to promote advertisers posts to their friends. This later led to a lawsuit and removal of the advertising option.
  • Cost per clicks on all networks continue to rise with ‘insurance’ keywords on Google Adwords averaging $54.91 per click in the United States followed by ‘loans’ keywords with $44.28 per click.

2012

  • Twitter rolls out a self-service advertising platform for US advertisers and will add other countries in the future.
  • Google surpasses $50 billion in revenue for the first time with 95% of revenue derived from advertising.

2013

  • Google launches Enhanced Campaigns which limit the ability to turn off certain devices.
  • Pay per click options for eCommerce websites increases with Dynamic Remarketing – the ability to remarket similar products to what the user has just viewed.
  • Facebook launches its own remarketing solution that can be attached to websites or mobile apps.

2014

  • Google launches the ability to track phone calls directly from ads and from websites allowing better optimisation of ads and keywords.
  • With pay per click advertising costs rising, companies are increasingly turning to conversion rate optimisation and the use of landing pages to maximise performance.
  • Advertising spend on PPC continues to grow with mobile spend up 98% YoY.
Duncan Jones

About The Author - Duncan Jones

I am a growth marketing specialist from New Zealand and im passionate about growing businesses through creative and performance focused digital marketing. I insist on tracking everything, follow a proven growth process that i've created and I still love the thrill of getting a first conversion then optimising & scaling the campaigns for clients across a huge range of industries. You can find me on LinkedIn here, find out how to hire me here or you can contact me here.

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